2 company is preparing its cash budget for the first quarter of the year. It has $10,000 in cash at the beginning of the period. Cash collections from customers for the quarter are budgeted at $28,000. Cash ment during the quarter for inventory purchases are budgeted at $25,000. The desired cash balance at the end of the quarter is $8,000. Other operating expenses for the quarter are budgeted at $20,000, wh ludes $3.000 depreciation. Cash expenses are paid in the month incurred. How much borrowing will the company need during the quarter? lect one: O a. None of the given answers O b. $18,000 Oc $4,000 Dd. $15,000 Oe.$12,000

2 company is preparing its cash budget for the first quarter of the year. It has $10,000 in cash at the beginning of the period. Cash collections from customers for the quarter are budgeted at $28,000. Cash ment during the quarter for inventory purchases are budgeted at $25,000. The desired cash balance at the end of the quarter is $8,000. Other operating expenses for the quarter are budgeted at $20,000, wh ludes $3.000 depreciation. Cash expenses are paid in the month incurred. How much borrowing will the company need during the quarter? lect one: O a. None of the given answers O b. $18,000 Oc $4,000 Dd. $15,000 Oe.$12,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 3PA: Echo Amplifiers prepared the following sales budget for the first quarter of 2018: It also has this...

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Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
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